I Played the Balance Transfer Game and Won

The following is a post from Grayson from Debt Roundup. Check out his sweet blog after reading how he gamed the credit card companies. Nice work, Grayson! Now, just need to finish up these Schedule E’s….

When you grab the shovel and start digging your way out of $50,000 worth of credit card debt, you will do anything that you see fit in order to minimize the process. As I starred at all of those greedy, plastic cards with my name on them, I decided I would use the cards to my advantage. Yes, I did use credit to run my way through college and to start an online e-commerce business, but why not try to use them to help me? This is when I decided to lace up my shoes and play the credit card balance transfer game.

For those of you that don’t know what the balance transfer game is, then here is a quick and dirty breakdown. You take a credit card that has a balance with a high interest rate and transfer it to a lower interest credit card. This saves you a lot of money in the long run if done correctly. It is a pretty easy game to play and here are the rules.

List all of your credit cards and interest rates in order of highest to lowest APR.

List your available credit on each card.

Ask your credit card provider for a balance transfer promotion.

If nothing available, then open up a new balance transfer credit card.

These rules are not really complicated and can be pretty easy to get a handle of. When I played this game, I had a credit card that had a good amount of credit available. I hadn’t seen any balance transfer promotions, so I called the credit card company. After a few minutes over the phone, I was able to score an 18 month 2.99% promotion. While some of you might think that 2.99% is not that great, I had an average APR of 14%, so this was a big win. I took my highest APR balance and transferred it over while on the phone with the rep.

The key to playing and winning the balance transfer game is to make sure that you are not paying a balance transfer fee. This is a very common fee that credit card providers charge to “process” a balance transfer. Many do a set fee or a certain percentage of your balance transfer amount. I was able to get this fee waived due to the amount I was transferring, but the rep on the phone had to get the manager’s approval.

If you can’t get this fee waived, then make sure you calculate how much you will save by transferring the balance. Another aspect is making sure that you will be able to pay off the full balance by the time the promotion ends. If you don’t, then most balance transfers will retroactively charge you interest on the full balance that you transferred. It will negate the whole process.

There are some out there that think balance transfers are not good, but I think they are a useful tool. If you have had as much debt as I, then you will use any tool that is available in your toolbox. During my four years of paying down credit card debt, I played the balance transfer game 5 times. I would transfer a balance, pay it off, then transfer another balance. I found that when you pay off a credit card, many providers will entice you to come back and spend money. I didn’t want to spend more money, but I did want to use their balance transfer promotions to help me get out of debt.

If you are in debt and need some help paying off your credit cards, then why not try the balance transfer game? It might not decrease the amount of time it takes to pay off your debt, but it will decrease the amount of interest that you pay. Any little bit helps, right? I played the balance transfer game 5 times and won it each and every time. Those “wins” helped me get through my financial turmoil and right my ship.

Author Bio: Grayson is the owner of Debt Roundup, a personal finance blog dedicated to helping everyone get out of debt. Grayson dug himself out of $50,000 worth of credit card debt and has started to gain positive net worth. Check him out at Debt Roundup.

Comments

I have been playing this game for a while and slowly winning. I am not able to pay off the zero percent card before the promotion period ends but I do knock a lot of debt off the card while saving over $1k in interest charges including the transfer fee. Once the period is about to end I find another promotion and transfer that balance and try to combine whatever else I can up to the limit to save more interest.Alan@escapingmydebt recently posted..Save Money in Your Bathroom

That is how you play the game Alan. It would be more beneficial to only transfer what you can pay off onto the 0%. Make sure you read the terms because some transfers will charge you full interest on the amount you transferred, not the amount you have left.Grayson @ Debt Roundup recently posted..Feeling Good Friday: First Week of Daycare

This sounds extremely risky but the fact that he accomplished it is awesome. I only have 1 credit card and I got it when I was 18 and about once a month the bank asks me if I want to raise my credit limit from that introductory $500 and I have been telling them no for years now. I don’t want $50,000 in credit debt!

My credit card debt was from building a business. I made some dumb choices, so I had to make the decision to fix them. Using balance transfers can be risky, but if you don’t take risks in life, you might not be rewarded. I was rewarded with a shorter payoff time and thousands of dollars saved in interest.Grayson @ Debt Roundup recently posted..Feeling Good Friday: First Week of Daycare

Bravo Greyson for using the tools at your disposal. I think for some people balance transfers end up getting used to make more credit available for more spending, but sounds like this one was used to get out of debt ASAP. Nicely done.Mrs PoP @ Planting Our Pennies recently posted..Top 5 Personal Finance Lessons From Warren Buffett

Thank you Mrs. Pop. There are many that would use them to create more debt, but they are great at reducing debt as well. You just have to know how to use the tools. It is a simple game that anyone can play and win.Grayson @ Debt Roundup recently posted..Feeling Good Friday: First Week of Daycare

Man, getting out of $50,000 in credit card debt without settling any of the balances is pretty impressive. In 2010 I paid off about $75,000 in total debt, but a relatively small percentage was on credit cards.

It’s funny you mention ‘grabbing a shovel’ when it comes to getting out of debt. When I was paying off my debt, I was only able to do it quickly because I was scrambling to grow my shovel and throw every available penny at the debt.

Hopefully as everyone is playing the balance transfer game (and winning) they’re also accelerating things as much as possible by earning side money and clobbering debt with it.Mark recently posted..Are You a Mood Spender?

Well, when you finance a business on credit cards (many of them) you have a lot of chances to play the balance transfer game. I got pretty good at it, so that is why I won. The only way to pay down debt is to earn more money. You can only reduce expenses by so much, but I had to think outside the box to earn more money.Grayson @ Debt Roundup recently posted..Great Financial Lessons We Learn from Warren Buffett

I only played the game because I had to Mr. CBB! I didn’t want to use any companies because I wanted to be responsible for it, since I caused it. The game is not bad, but it works very well if you have discipline. I didn’t take on any new debt in order to play this game, but I think that is good advice no matter how you pay down debt.Grayson @ Debt Roundup recently posted..Great Financial Lessons We Learn from Warren Buffett

I have certainly played the game when we were paying off our credit cards. It saved us tons in interest, but I won’t say it’s fun and I hope to never play again. Thanks for sharing.Kim@Eyesonthedollar recently posted..Eyes on the Dollar 20/20 Roundup #32-Happy Easter

Yes, you can’t just use up every balance transfer form that comes in the mail. Many of them have fees, but if you call them up, many will waive them in order to get your money.Grayson @ Debt Roundup recently posted..Can Credit Cards Actually Help You With Being Frugal?

I love this approach and your analysis, Grayson. Balance transfers are only bad if you run up both credit cards later. I totally agree: use every tool in your toolbox to wring every last dollar of savings out of your strategy.Average Joe recently posted..Our Biggest Episode Ever! – 2 Guys and Your Money Episode #34

The one thing I didn’t talk about was using my saved interest and putting it in my savings account. I did this because I wanted to have some savings when I was done paying my credit cards.Grayson @ Debt Roundup recently posted..Can Credit Cards Actually Help You With Being Frugal?

Great tips, Grayson! As you know, we are just starting this. We’re eager to use the tips mentioned above and win quicker this way too – thanks for sharing!Laurie @thefrugalfarmer recently posted..Emergency Preparedness 101

Meet Jacob

I'm a husband, father, and budget nerd who loves taking complex financial problems and breaking them down into a simple, easy-to-follow financial plan. It all started after getting engaged over 6 years ago... Read More…

Disclaimer

Information presented on iHeartBudgets is intended for informational purposes only and is not meant to be taken as financial advice. While all attempts are made to present accurate information, it may not be appropriate for your specific circumstances and information may become outdated over time. I am not a personal finance professional and you should seek out a professional before making any financial decisions.